Bank of England announces Digital Pound Lab

The Bank of England works, like many other countries to date, on the development of its own digital Central Bank currency (MNBC). But in order to speed up its work today, it is relying on a new tool which should be launched soon, and which takes the form of a laboratory on the subject. A Digital Pound Lab must be created.

FACTS

• The Digital Pound is therefore still at the heart of the Bank of England's research and development. And to materialize its commitment and, above all, to accelerate its realization, the Bank of England wanted to launch a new dedicated laboratory.

• The Digital Pound Lab is intended to allow the Bank of England and Her Majesty's Treasury to continue their study on the possibility of an e-book that would be easily exchangeable for cash and bank deposits, and would ensure the continuity of a reliable, uniform and accessible means of payment.

• The laboratory is thus presented as a platform for functional and technological experimentation involving a wide range of private sector partners. It must be launched later this year.

• This technological environment will allow practical experimentation:
  • API features (to test the potential capabilities of a digital book and its feasibility),
  • innovative use cases,
  • potential business models.

• The Bank of England states that, at this stage, no decision has been taken as to whether to set up a digital book. However, a design phase must take place over the next two years. This phase should allow consideration of all aspects of the implementation of Digital Pound (technology, operational, ecosystem, commercial, regulatory and financial).

ISSUES

• Continue its efforts : In 2020, the finance minister of the British Parliament submitted a draft framework for digital currencies while specifying that the Treasury is working in parallel with the issue of its own MNBC. But last June the Bank of England specified continue testing on the use of a digital book.

• Follow a global movement : The Bank of France and ECB, the EDF American, Brazilian central bank, the Royal Bank of India, the Chinese Central Bankthe Hong Kong Monetary Authority (HKMA), are all actors working internationally on the deployment of MNBCs. The trend is growing to such an extent that it has notably pushed the world's leading provider of secure financial messaging services, Swift, to unveil Last April, progress in the integration of MNBCs.

PERSPECTIVE

• This announcement concerning the prominent launch of a laboratory dedicated to the MNBC of England comes just after the regulators in New York and the United Kingdom have formalized their exchanges of expertise in emerging payments and digital assets.

• This transatlantic collaborative work was named Transatlantic Regulatory Exchange (TRE). It should enable the regulator to exchange experts and optimize the sharing of knowledge resources and regulatory approaches to change the sector.

• Improving consumer protection is at the heart of its work, as is strengthening the regulatory framework. But this collaboration must also support innovation, according to stakeholders.

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